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McKinsey Research: How COVID-19 Is Impacting Consumer Behavior

For marketers and other digital business leaders, the COVID-19 crisis has brought up many questions regarding the thoughts and behaviors of American consumers—and answers are beginning to emerge.

According to McKinsey & Company—which has been surveying 1,000-plus U.S. consumers ages 18 and up on a weekly, ongoing basis since March 16—while discretionary spending categories including travel, out-of-home entertainment, apparel and footwear, and home furnishings are down, shelter-in-place directives and social distancing have caused American buyers to spend more in a handful of other categories like grocery, home-based entertainment, and household supplies.

In addition, the survey’s findings show how marketers have plenty to learn from changes currently taking place. “There are going to be opportunities,” said Kelsey Robinson, a partner in McKinsey’s San Francisco office. “[Consumers] are using new products and services that they haven’t before.”

Shifting Behaviors

The study found that purchasing, not surprisingly, is now far more digital than ever before. Gen Z, Millennials, and higher-income households (earning $100,000 or more) are leading the charge to online channels.

Consumers are also adopting new behaviors (particularly online) that could continue even after the COVID-19 shutdown dissipates. Some are turning to websites they never visited previously for the basics (14%), shopping at a new grocery store (20%), adopting curbside restaurant and store pickup (15% and 19% for new and increased users, respectively), and using video conference software professionally and personally for the first time (21% and 23% for new and increased users, respectively).

Some companies are seeing first-time customers during the pandemic. Gen Z, Millennials, and higher-income households are also driving the increased trial and adoption of many digital services, such as entertainment streaming, gaming, grocery and restaurant delivery apps, and online fitness.

These changes could create future opportunities. In the near term, for example, retailers that can keep in-demand products in stock have the chance to win customers away from brands they otherwise would have been loyal to.

Navigating The Now And Then

Many marketers have been cutting back on spending as well as changing their marketing mix, according to McKinsey. The call to action for CMOs and other members of the C-suite, Robinson said, is to become ambidextrous. Many leaders are spending much of their time in crisis mode when they also need to think about planning to get ahead of the eventual recovery.

“They need to balance those two horizons and make sure they’re not spending 95% of their time on the now, leaving very little for figuring out their game plan for the recovery and how to invest in that,” Robinson said.

The best way to prepare is to maintain a real-time sense of consumer behaviors, needs, and emotions and become more agile in responding to their shifts, Robinson said.

“In most sectors, we see CMOs and C-suite leaders doing that—figuring out what they can do online, how they can shift their marketing dollars even if budgets are being reduced, how they can capture demand,” Robinson said.

Diversified, cross-category retailers, for example, are shifting their focus to things like stay-at-home clothes, sports and outdoor goods, and beauty products, and bolstering their online channels. Other brands are hard at work reimagining what their marketing spend will look like or increasing their promotional marketing to drive to demand.

There’s also a need to strike the right tone.

“There’s a whole piece of work around supporting employees and customers and making sure everyone is OK,” Robinson said, pointing to companies that have retooled their manufacturing operations to produce hand sanitizer or face masks, or brands like big-box retailers partnering to provide space for healthcare services. “This is a really important time to think about and make sure you are investing in your brand, and the question is, how do you do that? Part of that might be ensuring that your brand has an authentic and immediate way to contribute to society right now.”

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